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Financial News: German Industrial Output Falls Most Since 2009

German Industrial Output Falls Most Since 2009

02/07/2017 - 06:49:00 (RTTNews)

(RTTNews) - Germany's industrial production unexpectedly declined in December at the sharpest pace since 2009 on widespread weakness across sectors.

Industrial output fell 3 percent from November, when it grew by a revised 0.5 percent, figures from Destatis showed Tuesday.

This was the biggest decline since January 2009, when output decreased 6.9 percent. Economists had forecast a 0.3 percent rise for December.

On a yearly basis, industrial production dropped 0.7 percent, in contrast to November's 2.3 percent increase.

New orders as well as other economic indicators signal a revival of production growth in the months ahead, the economy ministry said.

Data released on Monday showed that factory orders logged its biggest growth in more than two years in December on domestic demand. Orders had climbed 5.2 percent.

The decline in production seems to be owed only to the specific Christmas holiday situation, due to which the seasonal adjustment significantly understates developments, Ralph Solveen, an analyst at Commerzbank, said.

As early as January, production will probably come in noticeably higher again, as is also signaled by available auto production data, he added.

In the fourth quarter, production remained virtually unchanged from the prior quarter. The ministry said output has fallen 0.1 percent.

Excluding energy and construction, industrial output slid 3.4 percent in December. Energy production declined 0.9 percent and construction output fell 1.7 percent.

Production of capital goods and consumer goods decreased 5.4 percent and 3.1 percent, respectively. Likewise, intermediate goods production fell 1.1 percent.

Today's data are also a good reminder that the German industry is far off earlier strength, Carsten Brzeski, an ING economist said. Looking ahead, he said the cold winter weather in January does not bode well for industrial activity at the start of the year.

The economist said the construction sector will take a couple of more months before waking up from hibernation. Following the release of new orders data, manufacturing sector is likely to accelerate in 2017.

At the same time, uncertainty in and about two of Germany's most important trading partners, the US and the UK, should put a cap on any upward potential, Brzeski added.

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